The Implementation of Blue Ocean Strategy To Create A Market Niche

  

ISSN 2355-4721 The Implementation of Blue Ocean Strategy To Create A Market Niche

The Implementation of Blue Ocean Strategy

To Create A Market Niche

  Hanifah Aswanti Setyawati Reni Dian Octaviani

  STMT Trisakti STMT Trisakti STMT Trisakti stmt@indosat.net.id stmt@indosat.net.id stmt@indosat.net.id hanifa.bgr@gmail.com _ABSTRACT

  Business competition among companies has led to major changes. Thus, companies must be responsive to the business strategy implemented [by competitors] and create business opportunities that can generate proits. One way is to implement Blue Ocean Strategy that allows businesses to create a niche market to get out of the red ocean competition so that competition becomes irrelevant. This study is aimed at analyzing the condition of a company implementing the Blue Ocean Strategy represented by PT Kintetsu World Express in the period of 2012-2013. By using the descriptive method and the theories in strategic management, it is clearly visible how the implementation of Blue Ocean Strategy by PT Kintetsu World Express Indonesia can make the company win the competition and becomes the “Market Leader”. Making the Internal Process Company (IPF - BOS) in order to optimize the implementation of Blue Ocean Strategy, making the value of the company and the products to be better in the consumer’s perspective.

  Keywords

  : Blue Ocean Strategy, market leader, excellence, competitors

  Hanifah, Aswanti Setyawati, Reni Dian Octaviani ^{ISSN 2355-4721} Introduction

  The tight business competition among companies has caused great changes in management, production, marketing, human resources management, and transaction handling among companies. Companies should immediately respond the changes to prepare themselves for global competition. Sustainable breakthroughs and innovations should become their agenda to be able to maintain and expand their market share. The business strategy to be implemented should be able to create business opportunities and to generate proits. One business strategy that is much implemented recently is Blue Ocean strategy, that is a strategy that enables business players to create a market niche so that they can go out of the red ocean competition and make the competition irrelevant (Kim and Mauborgne, 2006).

  The basic concept of Blue Ocean

  Strateg

  y (BOS) is Value Innovation, that is a strategy of how to move from the very high competition in the Red Ocean level which tends to be rude because of allowing any way. When the competition is increasing, the companies should be creative. Basically, Blue Ocean Strategy is a strategy to outdo the competitors by offering innovative features of a product they neglected so far. Radically, these features are usually different from what we have seen in the market. Value Innovation is not always a technological innovation but it can be an innovation to increase the beneit for customers according to the price and cost. Value Innovation takes place only when the company integrate the innovation with the utilities, price, and cost position. Buyer value increases through the addition and creation of elements that have not been offered by the industry yet, so that the cost much decreases when the big-scale economy works following the high sales volume caused by the excellent value that has been created. (Reismania and Purwinta, 2008)

  PT Kintetsu World Expres is one of freight forwarding companies that plays in logistic. It entered Indonesia in 1993 and join PT Ritra Cargo as a business partner (merger). However, this company separated (from PT Ritra Cargo) in 1997.

  Nevertheless, its business continuously grows and its main business is International Airfreight Forwarding. It uses a responsive service system network to improve its eficiency in operation and speed to serve the need of every region that has built “The

  Five Regional Group Management System”

  comprising:

  1. Japan region,

  2. American region,

  3. European, Middle East, and African region,

  4. East Asian and Oceanian region, 5. South-east Asian region.

  At irst, its sales division focuses more on the delivery service of household equipment, electronic products such as television, refrigerator, radio, and garment, spare part, even heavy equipment. In order to increase its proit, the company maximizes the Five Regional Group Management System. In addition, to win the competition among the similar companies, PT Kintetsu World Expres has also implemented various innovasion to create various products in order to deliver optimum services to customers. One of them is Blue Ocean Strategy

  (BOS). The legendary example of blue ocean strategy is the winning drama of iPod over Apple that grabbed the whole market of digital music. The product of iPod is very innovative and completely different from the previous ones like walkman or CD music player dominated by Sony. Music digitalization is the key feature of iPod, in addition to its user friendliness. Immediately iPod dominated the new market of digital music and left Sony far behind in its suffer and loss. http://strategimanajemen.

  The Implementation of Blue Ocean Strategy To Create A Market Niche ^{ISSN 2355-4721}

A. The Results of Analysis on Blue Ocean Strategy

  The four-action framework is developed by PT Kintetsu World Expres to reconstruct the elements of buyer value in making a new value curve in order to challenge the logic of strategy and business model. The four-action

  d. What factor that has not been offered yet by the company so that it should be “created”?

  b. What factor should be “reduced” until it reaches under the company standard? c. What factor should be “raised” unitil the upper limit of the standard determined by the company?

  a. What factor should be “eliminated” from various factors that have been received by the company?

  is as follows:

  framework

  2. Four-Action Framework

  net/2009/08/10/sepenggal-kisah-tentang- blue-ocean-strategy/#sthash.y9CQhN3H. dpuf

  Figure 1. Strategy Canvas The value curve, which is a basic component of strategy canvas, is a graphic description of the relative performance of the company related to the competition factors in PT Kintetsu World Express.

   

   

 

 

 

  This strategy is an action framework implemented by PT Kintetsu World Expres which is at the same time a diagnosis to build a good BOS by understanding the ongoing competition, understanding various factors that inluence the product competition— services, delivery and what consumers obtain from the competitive offers in the market, and then summarizes the offering level the buyers get in all the main factors of that competition.

  In order to formulate the Blue Ocean Strategy, it needs an analytical tool namely strategic canvas that summarizes the value curve of the company and its competitors. It also needs a four-step framework to reconstruct the elements of buyer value so that it creates the blue ocean strategy. Through this framework the blue ocean strategy is formulated. The Blue Ocean Strategy will be formulated in six principles of formulation, i.e. four principles in the strategy formulation and two principles in the execution. The four principles of strategy formulation include reconstructing market deinition/limitation, focusing on the big picture, reaching beyond the existing demand, and doing a series of appropriate strategic things. The two principles of execution are overcoming the main obstacles in the organization and integrating the execution into the strategy (Kim and Mauborgne, 2006). The tools to analyze the Blue Ocean Strategi is explained in the following three things:

  Results and Discussion

  . (downloaded on 24 April 2015) In this research, the writer uses the descriptive analytic method and the theory of strategic management; strategy formulation, internal business process, and Blue Ocean Strategy.

1. Strategy Canvas

  Hanifah, Aswanti Setyawati, Reni Dian Octaviani ^{ISSN 2355-4721}  

   

  that frequently modify their products and services excessively (the common mistake made by many companies).

  c. It is easy for managers in any level to understand it so that it creates the high level of involvement in its implementation.

  d. It encourages the company to

   

  enthusiastically analyze each

   

  Figure 2. Four Actions Framework competitive factor of PT Kintetsu World Expres. From the irst two questions (eliminate and reduce), and the last two questions  

B. Steps of Strategy Formulation

  (increase and create) we can get   knowledge about how to increase the PT Kintetsu World Express Indonesia buyer value and create a new demand. that operates in freight forwarding business always tries to improve its service to

3. ERRC Grid customers. Therefore, it should be able

  (Eliminate – Reduce –

  Raise – Create Grid

  ) to create a new strategy by utilizing information both internal and external This scheme encourages PT and applies the theories supporting the

  Kintetsu World Expres to create a new   value curve. formulated strategy to achieve optimum  

   

  results. In addition, the strategy formulation made by PT Kintetsu World Express Indonesia should be accompanied with the improvement of employee performance to strengthen its competitiveness and to create innovations that have not been made by its competitors.

  The following are the steps taken by PT Kintetsu World Express Indonesia to   formulate its strategy:

  1. Doing self-evaluation to ind the Figure 3.ERRC Grid company’s advantage

  The management of PT Kintetsu By encouraging PT Kintetsu World

  Expres to ill in the scheme with actions World Express Indonesia should be of eliminating, reducing, raising, and able to correct and evaluate itself

  creating

  , it can provide four beneits as comprehensively to ind the excellence follows: and advantage of the company. It means that the excellence should become an

  a. It encourages the company to pursue icon that is dificult for the competitor the differentiation and low cost at the to compete against. The excellent same time to break in the exchange of products of PT Kintetsu World Express value–cost.

  Indonesia, among others, are:

  b. It strikes the companies that focus

  a) Logistic, only on their efforts of raising and creating, so that it enhances their cost

  b) Trucking, structure. It also strikes the companies c) Warehousing.

  

ISSN 2355-4721 The Implementation of Blue Ocean Strategy To Create A Market Niche

  2. Understanding the position of PT

  a) Having its own freight system called

  uniied freight system to allow the

  Kintetsu World Express Indonesia among the competitors. customers monitor the travel of their cargo. Being in the midst of competition

  b) Building a cooperation with which is getting tighter requires the

  airliners to make a contract of rate

  company to be able to create an “out of to get lower price compared with

  box” situation by continuously making competitors.

  self-improvement so that it will always

  c) Customer service oficers can be be in a better position rather than the contacted 24 hours a day, and can competitors. make reservation at any time. The competition for market happens in

  d) Adding the number of branch ofice the factors of price, speed of responding throughout Indonesia to inarm the complaints, speed of conirming the customers out side Jakarta. space as well as the airline rate which

  4. Formulating Blue Ocean Strategy has not been competitive according to the customer’s want. Therefore, it is The formulation of Blue Ocean Strategy, necessary for the company to approach which can be done only if the company airlines and build strong relationship. has a clear focus and goal, is done by PT Kintetsu World Express Indonesia 3. Making continuous innovation. to produce better process and then to

  PT Kintetsu World Express Indonesia create a wider market niche. (Yogi, et would rather evaluate sustainably the al., 2007) products it produces so that it knows the customer’s want exactly. In line

  C. The Company’s Internal Process

  with this, product innovation is needed Internal Process should be done as the one of important elements in in depth by internal PT Kintetsu World the company’s existence. The new Express Indonesia with the aim of making innovation is expected to be able to the company more ready in implementing compete with the competitors. The Blue Ocean Strategy. The following is the innovations made by PT Kintetsu description of Internal Process as a Value

  World Express Indonesia in facing the   _Chain: competitors are:  

    Source: Strategi Bisnis   , Frans Mardi Hartanto, 2004 Figure 4. Budaya - Kepemimpinan - Integrasi

  Hanifah, Aswanti Setyawati, Reni Dian Octaviani ^{ISSN 2355-4721}

  Therefore, in making changes it also should be done by the comopany (Frans need a change of concept because it will Mardi Hartanto, 2004): make a great reshufle in the company.

  The following are conceptual changes that Table 1 Internal Process as Value Chain

  Changes in Technology Concept Table 2 Changes in Production Patterns

  Table 3 Changes in Resource Use

   

  The Implementation of Blue Ocean Strategy To Create A Market Niche ^{ISSN 2355-4721}

  b) Assurance for on schedule departure and arrival in the destination.

  Based on the concept of pattern changes above, it should be easier for the company to implement the Blue Ocean Strategy to be the best and can adapt the consumer’s want in a better way.

  d) Assistance in claim arrangement to the airline.

  c) Cargo handling services from customer’s warehouse to the consignee’s warehouse.

D. Blue Ocean Strategy

  a) The employees of PT Kintetsu World Express Indonesia are mostly bachelors in their ield of work and have been trained before they work.

  e) Quick and appropriate services.

  All this success is achieved because the company has made a Proses

  In the midst of very tight competition, the implementation of Blue Ocean Strategy carried out by PT Kintetsu World Express Indonesia inally leads the company to be “market leader”, because the company has an excellence (strategy to compete) that the competitors do not have, or although the same but different in its application.

  Conclusion

  d) Warehouse development.

  c) Branch ofice expansion.

  b) Vehicle (trucks).

  a) Employees are the most valuable investment.

  4. Investment and development

  f) To build trust with real evidence.

  d) Reliable, frioendly, and polite human resources.

  b) Every six months PT Kintetsu World Express Indonesia holds dangerous goods and basic cargo training.

  c) Service quality provided, always listening to and understanding what the customer wants.

  b) Competitive price compared to the competitor’s.

  Literally, Blue Ocean Strategy is an effort to create a market niche through a continuous innovation with the main key: see the consumer’s needs that has not been adapted by the competitors so that a proitable business opportunity is opened widely.

  3. Satisfying services

  It can be said explicitly that the principles which have to be paid attention in the Blue Ocean Strategy are always creating new area where there is no competitor and leaving the area where competitors have entered. Thus, whatever the competitors do, it will not inluence the company.

  In order to execute the Blue Ocean Strategy, PT Kintetsu World Express Indonesia do some actions, such as:

  1. Education and training for Human Resources empowerment

  2. Competitive offerings for Consumers The aim of competitive offerings is that the consumers are always satisied when they buy the product of PT Kintetsu World Express Indonesia. The competitive offerings are such as: a) Space assurance.

  For manager, the education and training is leadership, whereas for operator is training peb.

  a) PT Kintetsu World Express Indonesia has various services including door to door, door to port, port to door, and port to port cargo handlings.

  Hanifah, Aswanti Setyawati, Reni Dian Octaviani ^{ISSN 2355-4721}

Internal Perusahaan Kantor Cabang Pembantu Dinoyo

  (IPF – BOS) in order to optimize the implementation of the Malang) , Accessed on 7 December 2013 from http://elibrary.ub.ac.id/

  Blue Ocean Strategy. Thus, the value of company and its products becomes better handle/123456789/28173. in perspective of consumers.

  Yogi, MS, et al. 2007. Manajemen Strategi

  Terapan. Panduan Cara Menganalisa PT Kintetsu World Expres & Pesaing.

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